How much did the artist get for each radio play? Nothing you say. Subscription services are arguably more comparable to radio than purchasing an mp3 or CD. At least they make something off the subscription service. It's a gain as far as I can tell.

First of all, most artists who create their own CDs don't make anywhere near $8 per CD. Having a CD produced varies greatly but the less you produce the more it costs per CD. Many artists go for short runs when they are starting out but they still have to shell out a couple of hundred bucks for 100 CDs. There are also the studio, production, and marketing costs which may or may not be present depending on the individual artist and the desired quality

At half a cent per stream (and 1.5m plays a month) they would make 75k a month A MONTH. That would be 900k a year. There really arn't that many artists that I think should receive 900k a year. The ones who do deserve that, will have no issues getting the 1.5 million plays a month.

At half a cent per stream (and 1.5m plays a month) they would make 75k a month A MONTH. That would be 900k a year. There really arn't that many artists that I think should receive 900k a year. The ones who do deserve that, will have no issues getting the 1.5 million plays a month.

Minimum wage for 1 song == living wage for multiple songs, which most artists have.

The real question isn't "Should they be satisfied by minimum wage" but "Is this enough to induce potential creators to release a product, thereby maintaining the furtherance of modern culture?" I submit that minimum wage does that, as it acts as a supplement to other income -- songwriting, after all, needn't take 40 hours per week.

I'd further submit that, for many, many artists, no monetary inducement is needed for the cr

What a troll. Its extremely unreasonable. Using your cost model, if an artist received 20,000 plays in a year, he made $200. He can't even pay rent for a month on that. Now, who's being greedy!

Small bands may be lucky to see a couple thousand plays in a month. You basically just ensured the band self destructed. Furthermore, you are arguing that the purchase of the song should cost hundreds if not thousands, and possibly tens of thousands each.

Using your cost model, if an artist received 20,000 plays in a year, he made $200. He can't even pay rent for a month on that.

The song is already written; he can go get a real job. Or write more songs. Or tour and make a living off that, like hundreds (thousands?) of bands do. Or write a book about his band experiences, or the sad state of copyright, or a vampire who glitters in sunlight. Or make a reality show.

Why should writing and releasing a single 3-minute song mean living wage for a year?

Why should writing and releasing a single 3-minute song mean living wage for a year?

Exactly.

And lets say that same song was legally purchased and downloaded 20,000 times in a year for 99 cents each download, which is a demonstration of even more real commercial success than 20,000 plays. Even $20,000 isn't a living wage, assuming that the artists were getting 100% of that (and they won't be, of course). So the reality is, if your piece of shit band is only getting 20,000 plays a year, your band simply isn't commercially viable and you need to find a day job. No one owes you a "living wage" for producing a product no one else wants.

Jones argues that music service subscriptions don't operate at margins "anywhere near 30%," and that the dramatic loss in revenue will be tough to survive.

Then price your products accordingly. People are willing to pay for iPads because of the convenience - they will pay for iSubscriptions for exactly the same reason.

According to new stories I've read from other sites on the same subject, Apple forbids them from charging more to iOS users than they do through their own web storefront.

All they have to do is have a separate iOS streaming subscription.

$X for streaming to PCs and Android$X*1.3 for streaming to PCs, Android and iOS

What they *can't* do is offer the same purchase as an in app purchase outside of the app for less than inside. So they can't offer the iOS streaming package for less on their website than they do within their app.

People were doing that. The thing is, if you've already got development and distribution and promotion and all that stuff handled otherwise, factoring in 30% for essentially nothing but payment processing is pretty much unprecedented.

Something like 2% or 3% is closer to normal. Given the tie-in to an existing and popular gift card ecosystem (iTunes cards) and the near universal participation in the system by iOS users, maybe even 5% would have been reasonable. But 30%, for just payment processing? Even as an avid iPhone/iPad/MacOS user myself... too much, too much.

(Unless you're allowed to charge more to make up for it. That'd be better.)

According to new stories I've read from other sites on the same subject, Apple forbids them from charging more to iOS users than they do through their own web storefront.

Yup... charge them all the same for the iSubscriptions/eSubscriptions, just price your product so it is profitable. If you don't then you won't be producing anything before too long. If your product ends up too expensive (eg, you'll need to charge more than the market feels it's worth) then your business plan needs some work.

Seems to me the solution is charge iOS users the same price regardless of subscription source but charge less for Android/Win7/RIM/etc users. Or does the Cult of Steve think they can dictate terms between two non-Apple entities beyond jumping up and down, stamping its feet, and complaining that they are being competed against?

There is no reason to assume that Last.FM can profitably raise its prices, or that it could raise its prices enough to afford paying Apple's 30% fee without losing more customers than it would gain. What if Last.FM is already operating at or very near to the equilibrium price point?

All businesses pretty much adhere to a general way of operating, finance and accounting-wise. All retail is pretty much within, for example, 3%-10 margins on average.

Wow, you sure work in some sorry ass poor retailers. To me it looks like you have no clue about business. If you try to run a business on 3% - 10% gross margin then you need to go ask someone if they want fries with their order. The market decides what price point any particular producer can charge for their product and they charge what the market will support.

Is 30% way too much for Apple to charge for this "service"? IMHO yes, but they are charging what their market will bear. The content producers nee

Here's the easy fix. Ditch your app and make a web-based app. Apple has no control over that and it will port more easily to other platforms such as Android, Web OS, WP7, MeeGo, etc. If you're doing it right, you can even make it easy for your users to make a shortcut to your web-app that shows up as though it were an app.

If that's too much work, don't offer subscriptions through the iOS app. Make a free version that throws in commercials every so often. 30% of $0.00 is $0.00.

I think these companies want to complain because 30% cuts into their profits, but I don't know how many will leave because the iOS user base is still worthwhile even at 70%.

As for the anti-competitiveness of it all, is it really a problem? After all, Apple has been losing market share to Android so who really cares if they want to make themselves a much less attractive platform. On the other hand, I can't buy e-books from Apple and have them work on my Kindle so as far as I'm concerned it's not a good argument for Amazon. If nothing else, hopefully these spats will help drive DRM-free ebooks.

No, just no. If your profit margin is less than 30%, a 30% cut to per subscriber revenue means you're losing money on every customer, before any fixed costs. You can't just "make that up in volume".

If you loose $0.50 on every customer, and you have 1 million customers, you just lost $500,000. If you try to make that up in volume and sign up another 9 million customers, you're now losing $5 million.

I think these companies want to complain because 30% cuts into their profits, but I don't know how many will leave because the iOS user base is still worthwhile even at 70%.

No. Its not. That's the issue.

If I write a small app with a subscrption and generate 2,000,000 in sales, and have 1,600,000 in expenses, I'm making a modest but respectable 400k; enough to live comfortably, and even have an employee or two.

Things are sailing just fine. Apple now decides they want 30% of subscription revenue... that's 60

If I write a small app with a subscrption and generate 2,000,000 in sales, and have 1,600,000 in expenses, I'm making a modest but respectable 400k; enough to live comfortably, and even have an employee or two.

Things are sailing just fine. Apple now decides they want 30% of subscription revenue... that's 600k for processing processing a VISA card through their app store. Directly through VISA I was paying 2.5% or $50,000 annually. So I'm now operating at a 150k annual loss from a 400k annual profit.

Apple's demands of 30% only take effect if the iOS user subscribes through the app. If the user is an existing subscriber, nothing changes.

Yes I know all that, but then you are faced with a conundrum... you can't charge more on the app store to cover the users who go that route.

And you can't afford to take a loss on the customers who go that route... so you effectively have to raise your prices to cover your losses on the app-store buyers... the more people that use the app store the higher prices go.

Doesn't work. These services require DRM. Apple happens to have blocked the only good way of doing DRM in the browser. I believe that Google is attempting to do Javascript pseudo-DRM to get around this, but I doubt it will be very effective.

Lots of people are saying this is a non-issue and demonstrating it with their easy way to get around Apple's restrictions, but I suspect that Apple already thought of all these easy work-arounds. Apple i

Safari's had the ability to play music in the background for a while. It could do it before any other apps could. The only problem is I think it has to be a stream that quicktime understands as that's the only possible player Safari will support. I know that's how the game audio for the MLB app worked. You clicked a link in the app and it would switch to Safari for the audio. Then you could exit Safari and it would keep playing.

I hate that people are already saying "well don't buy it" or "don't use it." Here is the reality of what happens in the REAL world:

a) Company pulls out of the marketb) Company raises their prices, in some form or another, to cover the cost. Consumer loses. Consumer pays more.

The winner? Ding ding! Answer B. That's what happens. So thanks to Apple, instead of paying, what $3 that Last.fm charges, they'll charge more. It could be $5. Or they could raise it to the competitors like Zune which is $10. I wouldn't bat an eye to pay for $3 for music a month. For $10, I might shop around first and potentially they might lose a sale.

And here is an even bigger problem. That cost will be raised for everyone else too. So you got an Android phone because you don't support Apple being an evil company? Too bad. It's $10/mo for Last.fm no matter what.

And wait, it gets worse! It raises the traditional pricing level for that product. It seems everyone is either in the $3/mo tier, $10. But at least you have a choice. But when Last.fm charges $10 because they can't make it at 3 with Apple's blatantly rip-off policies, now the norm will be $10. Thanks Apple! Now you have no choice--everyone pays $120 per year instead of being able to choose one that's $36 per year.

But alas, I'll get flamed and modded down to hell for this. I really think they enjoy the useful things at reasonable prices being ruined and they like to say "thank you sire, may I have another?"

As a side note, I do think Zune Pass is a very good service. I was just throwing it out for illustrative purposes. Though $3/mo for unlimited music streaming is pretty incredible though. I wouldn't want that gone, you know?

if last.fm is making it on $3, they can raise their price to $4 and more than cover the 30%.

Math fail: They'd need to charge about $4.30 to make the same profit (a 43% price increase). The GPP was worried that there doesn't seem to be a price tier between $3 and $10, so they might just jump to $10 (and possibly add other features to justify that). If you like the $3 products over the $10 products, that would be annoying, but I'm not sure how true that is.

I don't have an iPhone, iPod, or iPad, and I do not like the idea of being charged $4.00 instead of $3.00 because they raised the price for all their customers so Apple could skim 30% from iPhools. How would you like it if your cable bill went up 30% because the manufacturer of your TV wanted a cut? You use your car to get to work, how about paying 30% of your wages to the auto maker?

This is at the heart of the issue.
I personally know 3 different devs that have now halted building their apps for idevices, even the ones that weren't intending to build in a subscription model in the first iterations (if at all) are saying its too risky because if Apple are willing to do this what will they change next? In my conversations with them they all seemed pretty unwilling to hand over yet another business lever to Apple.
They are switching to msites and android now.

Developing for IOS has been a crap shoot from jump street. Apple has always retained the right to deny an app access to or remove it from the App Store for any reason...or for no reason at all. You could easily put a ton of time, money and energy into developing an iDevice app just to have Apple slam the door in your face without apology or explanation.

There's a lot of money to be made by working in Apple's walled garden, but the risk that you piss off the beast and get

[quote]And here is an even bigger problem. That cost will be raised for everyone else too. So you got an Android phone because you don't support Apple being an evil company? Too bad. It's $10/mo for Last.fm no matter what.[/quote]

Who says? AFAICT the terms only say they have to charge the same price for subscriptions on the iOS regardless of source. Where does it say in the terms that a service has to charge the same price for apps operating on non-Apple devices?

Exactly. Which was my point. The jerkoff at the playground is ruining everyone's playground.

That's why we as consumers should just not accept it, complain, not support the company's actions, evangelize to others about the evil policies, not purchase the products, create awareness in the media as to the awful repercussions, ad nauseum.

Charging 30% of the price of the app you developed with XCode and Objective-C both of which were developed by Next then Apple and which is then sold and promoted by the iTunes Music Store is one thing.

Charging 30% of all the money you make offering subscriber content seems exorbitant and could be argued as being a predatory business practice. Personally, I believe many others will see it this way and we will see this matter in court before too long.

In the end however, I think Apple's alienation of low-margin subscriber services such as Last.fm, Rhapsody and others will only make the Android platform stronger.

There are several flaws with Apple's new subscription model. According to Apple's =press release:

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,”

In theory, I agree, and so would most publishers. However, Apple's model doesn't operate that way:

Not all purchases made through an application are new subscribers, it may be an existing subscriber who is renewing. As the policy is written, Apple would still take 30%

Apple handles renewals, including automatic renewals for all subscriptions purchased via Apple. This means that Apple actually making the subscriber a customer of Apple, not a subscriber of the content provider. That's true even if it's an existing subscriber who renews via Apple. That is not how existing subscription models work, if you sell a new subscription, you get an one time commission, and all the renewals are handled by the publisher with no additional commission paid.

The publisher is prohibited from providing a link to their own online subscription signup/renewal from within an application they wrote, and the MUST provide a link with all the same subscription options within the app. All those must go through Apple, even if it's for an existing subscriber.

Even though the customer owns the iOS device, the publisher wrote the application, creates the subscriptions, and delivers the content, they are prohibited from making it convenient for customers to deal (or continue to deal) directly with the publisher from within the publisher's own application. In most cases, Apple isn't even hosting the content or providing the bandwidth for delivery. In short, the only way Apple might be involved is that they made (and sold) the iOS device, and is in accepting a payment (and only because of a policy that prohibits the publisher from making it easy for the customer and publisher to do business directly with the publisher). That's not worth 30% by any measure.

The policy as written is completely inconsistent with nearly all existing subscription business models, makes it easy for Apple to "steal" existing subscribers and take 30% of the subscription fees, and makes it more difficult for existing subscribers to subscribe or renew with directly with the publisher. It's completely inconsistent with the stated intent and philosophy. If not corrected, it will dramatically reduce the available of non-iOS specific content services such as Netflix, Pandora, Last.FM, and Rhapsody on the iOS platform. Fix it now Apple.

Well, start with the fact that Apple doesn't immediately bill for each song. Buy 4 songs in one day, and you'll see a single charge for all 4 songs, even if you bought each one a different times throughout the day. Then, understand that many people use iTunes cards or PayPal rather than a credit card. My guess is that cc transactions for a single song is a very low percentage.

I don't think Musicians should be able to make a living performing music. It should be a hobby--something to do that's more productive than watching TV or writing thousands of posts on Slashdot. It takes a lot of time and effort to release a single album--but not so much that you can't supplement your income with other jobs. Or doing concerts/tours/charity events/something-other-than-selling-digital-copies-of-your-music. Which most artists do anyway.
This is coming from the son of a musician father and

Does Last.FM make computers? No. Does Apple make computers? Yes. Do some of Apple's computer products feature restriction systems that allow Apple to prevent Last.FM from competing for the users of those devices? You bet.

Rhapsody *might* work via web browser on Linux, but I don't know this as fact. Honestly, knowing that you use Linux, I wouldn't send you Rhapsody's way. (Although it doesn't hurt to check it out.) I *think* they have an Android version, if not I think it's coming soon.

I might suggest you head towards Napster instead. At the very least, if you pay the $60 for a year, you get 60 MP3 downloads. So even if you think the service sucks you can get your Mp3s and be done wtih it.

Their catalog isn't really any worse than iTunes, but that's not good enough. Neither iTunes or Amazon have everything I want and Amazon doesn't usually disappoint.

On a side note, if anyone knows where I can get a digital copy of Z-Rock Hawaii I'd be more than willing to provide some business to them. None of the major online stores have the album and I haven't found it on any of the streaming sites either.

I doubt NetFlix has lost even a dollar in subscription fees from geeks ripping copies of rented discs (distributing those copies is a different matter). I doubt allowing you to make copies of subscribed songs would cost the provider a dollar (distributing those copies is a different matter).

Subscription seems to be the future, because it can be carefully tuned to extract the maximum from teenagers, as long as offline play worked well enough for that market.

Maybe it's just me, but I'd rather own my music (DRM-free of course.) so that I don't need a net connection in order to listen to it....Paying for a subscription seems like a waste.

That makes me wonder if you have cable or satellite.;)

But yeah, you're not alone. I think we have different perspectives on this, though. I see it as 'on-demand entertainment' (like my subscription to Netflix) and, apologies if I'm mistaken, you see it as "music I can't keep". I have trouble finding music that suits me. I like rummaging around trying new stuff, and I have to hear it a few times before I really decide if I like it or not. I'd either have a smaller library or I'd have wasted a lot of mo

Actually, the big 4 (Sony BMG, EMI, Warner and Universal who account for something like 99% of the content on the big subscription services) together only make about 5 million songs available. Together they have a back-catalogue of about 200 million songs, most of which you'll never see again in any shape and form because they deem the cost of media transfer and meta-data editing to high in relation to how many they'll sell of each.

Actually, the big 4 (Sony BMG, EMI, Warner and Universal who account for something like 99% of the content on the big subscription services) together only make about 5 million songs available. Together they have a back-catalogue of about 200 million songs, most of which you'll never see again in any shape and form because they deem the cost of media transfer and meta-data editing to high in relation to how many they'll sell of each.

I don't know about the 200 mill number, but Spotify have over 10 million tracks. There are some holes in the catalogue, but very few. And those 10 mill tracks are available to me right now, for almost nothing - around half a dollar per day in a high-cost country, where do I go to buy the 200 mill and at what cost?

I'm unfamiliar with Last.fm. With Rhapsody and Napster you pay a monthly fee and listen to all you want. There are more distinctions between those two but I'm not sure anybody's terribly interested in hearing about them.

Isn't the article about magazine subscriptions?

I didn't read the article, but the headline says 'music subscriptions'. I'm personally annoyed with Apple about it, too. I was a Rhapsody subscriber before the iPhone was even in development. I don't see why the

hell last.fm or pandora or amazon they could have the same item for 30% more on the apple side and still have it as they do now on their side..

Except that they couldn't. Apple's new rules require that they charge the same price via in-app purchasing (with the 30% cut paid to Apple) as they do when selling subscriptions on their own site (without Apple taking a cut). Companies like last.fm and Pandora have to either put up their prices in general or stop offering music on the iPhone.

I used to think this. Then Spotify came along. It changed everything, and represent to me the new model for music everybody is asking for.

Not only the streaming promise of having access to unlimited music, but so elegantly, user friendly, fast and easy implemented. Plus sharing with friends, social playlists and offline syncing to mobile devices. One day I suddenly relalized I even preferred using it to play tracks I already had on the harddisk. So damn convenient is it.

I think the root idea here is that buying music on a song-by-song basis is no longer feasible at current costs. Everyone loved the 99 cent songs on iTunes, but now even that is way too much. Is a dollar really worth the average amount of time you listen to a song? I'd wager that's, at absolute most, an hour per month for most people, for an average song.

Is there any way to get your spotify tunes in your car without a smartphone?

There is this: http://www.applian.com/replay-music/ [applian.com] . I use that for exactly same purpose, works great. Converting Spotify playlists this way is as easy as any other method of getting music to your car. An as legal (at least where I live).

Has Apple ever been about anything other than elegantly polished control(with the possible exceptions of the early Woz years, and the Scully period where they were too busy sucking to be about anything...)?

The only real change is that they now have the power, and the crypto, to bring to fruition the exact same principles that have motivated them for years.

I am a long-time Apple user. However, I am also a huge music fan and I am listening to Last.fm on an iPhone right now. If Last.fm discontinues the app because of the new policy, Apple will have created another Android owner.

So last.fm will force you to remove the app from your iPhone, or make their service incompatible with it? And that's Apple's fault? They aren't remotely asking for something like that.

Sounds as if the AC considered the Last.fm service more valuable than the "Apple experience." In other words, if Last.fm leaves the iPhone, so will he. Nothing wrong with that, unless you think the AC is wrong to choose the thing he or she likes.

Damn well straight they are asking for that. If a business attemps to dictates untenable terms (30%) with obvious consequences (cannot competetively operate at a profit) then they are either asking for those consequences or are incompetent. I am not a fan of Apple but I would never accuse them of incompetance. Arrogance yes, but not incompetance.

Damn well straight they are asking for that. If a business attemps to dictates untenable terms (30%) with obvious consequences (cannot competetively operate at a profit) then they are either asking for those consequences or are incompetent. I am not a fan of Apple but I would never accuse them of incompetance. Arrogance yes, but not incompetance.

They are asking for what? Care to point to the exact words where Apple asks last.fm to disable their software? Or make their streaming incompatible with their own app? And most importantly, where does Apple ask last.fm to extort a fee from mobile users for a service that is free for desktop users?

"a platform that is pretty much the other biggest half of the market and in an explosive growth market in general."

this is the crux of it tho. Apple provides more than just a payment processing system. they provide access to 100+ million users who can pay with a single click, and more importantly have shown their willingness to do so.

This is what they are charging 30% for access to.

Up until now these services have been getting a free ride, and they all know exactly how valuable access to that market is wor

each paycheck you get $1000. you can keep that (ie not put your app on the iDevices)

or instead each paycheck will be $700. but you will get three times as many paychecks.

I was generally with you up until this, because it misses the issue. They aren't taking 30% of the PROFIT. They are taking 30% of the REVENUE.

Each subscriber they take has a cost associated with it. Suppose for each sale that generates you a cheque for 1000 you had expenses of 800, and profit of 200. That much more closely models the situation here.

Apple taking 30% of revenue, means you get a cheque for 700. But your expenses are still 800. So now you are in the hole. Getting 3x as many customers just puts you 3 times deeper into the hole.

If apple was taking 30% of the profit, they could swallow it. But very few markets can really afford a 30% swipe at their REVENUE.

Here's a final comparison:

Apple itself in Q4 had 20B$ in revenue, and $4B in profits. If someone took 30% of Apple's revenue, it would have gone from 4 billion in profits to a 3 BILLION DOLLAR LOSS last quarter. Its shares would be tanking in that sea of red ink.

If you don't like Apple's policies, don't sell your software for their shitty products. Instead of whining about Apple, I just ignore them.

Sure, but Apple isn't ignoring *you*.

What Apple has done here is dictate that you will be governed by Apple pricing policies *even in transactions Apple is not a party to*. If you're a consumer using an alternative store, Apple says you must pay more for certain content than either the publisher or store wants to charge you. As a publisher who has no intention of selling through Apple, you must sell through stores whose success is limited because Apple forbids price competition on many popular products.

[quote]Apple and any other company that hosts and shares this music deserve a piece, say 30% or something. And the rest needs to go to the ARTIST.[/quote]

The content of your comment implies that you didn't read the article. This article isn't about Apple getting a 30% margin of music sales, nor is the article about record companies getting too much money. Services like last.fm, pandora, and netflix purchase the rights to content from the record companies and repackage the content for streaming. They are the middle man, albeit a very visible, important, and useful middle man.

Apple's 30% revenue theft doesn't effect the record companies, it effects the service